A couple of thought-provoking posts on inheritances at Yet Another Blog About Money and Crazy Money. YAB About Money has thought about the inheritance he might receive, but says that its presence does not affect other financial plans. Crazy Money, on the other hand, doesn't think about the inheritance at all and prefers not to know how much it is right now.
It's a touchy subject. I don't think it's ever fun to talk about your death or about someone else's death to their face. In a lot of cases it's insulting to do this. At the very least it's uncomfortable.
If you know that you're inheriting nothing, or worse, inheriting debt, then it's easy to decide what to do with the money: nothing.
But what if it's in the cards that you stand to inherit a little something, or even a lot?
Here's my take on it. I agree with some of what's been said at these other two posts, and hopefully I'll add to the discussion:
- It's unwise to bank on an inheritance. Meaning that it's unwise to not save for retirement, for college, for whatever, because there's $X.Y million in your future, for a number of reasons. Estate tax laws can change. Big medical expenses can eat up a lot of that cushion really fast. Your parents could live to be 110. They could have a rip-roaring good time with their money. Or they could just change their mind about where it's to go when they die. Again it's their choice. Frankly, if they see you counting on it, it's not going to reinforce the thought that you're worthy of that inheritance.
- Ideally your parents, etc., will know you well enough to tell you what you can handle knowing. If you're fiscally responsible, they can tell you more about their finances so that you can plan yours better. If you're not particularly responsible, they may not, or they may have things set up to dole it out to save you from yourself. (I'm not speaking to anyone in particular with those two statements; they're just examples.)
- If you don't know or aren't sure, it's wise to think beforehand about what you would do if you inherited nothing. How would your finances look assuming you didn't receive a dime from your parents, or nothing more than a tax-refund-sized inheritance? Other than inheriting debt, this is the “worst case” for your bottom line.
- If you don't know or aren't sure, it's wise to think beforehand about what you would do if you inherited a lot of money. Windfalls are great tools if handled properly and planned for, and they can be devastating if not planned for. Even if the windfall never materializes, I think it's much better to think about how it would or should be used before it's received than after it's received. It's better to think about these things with a clear head, without duress, so that when all of the emotions and other stress of the death happen, there's a better chance that wise decisions will be in place to deal with the windfall. It's just about guaranteed that there will be lots of people showing up, minutes after the casket is lowered, with fantastic ideas about what to do with your money, and knowing full well that you're in no condition to think clearly. Putting a game plan in place is your defense against this opportunism.
What are your thoughts?
I have thought and posted on what I would do if I got a windfall.
I would be happier, though, if either of my parents left just enough for a decent funeral. I'm very independent minded and don't really like the thought of getting money from my folks, even if they are dead.
Great topic!
It isn't possible to inherit debt… thank goodness.
The deceased’s estate must stand good for the debts, once the estate money runs out… the creditors don't get paid. This may mean that the house / car / boats, etc has to be sold to satisfy the debts. Any remaining balance is not the responsibility of the heirs; unless they signed for the debt in the first place. In that case they aren’t inheriting the debt, as they are already responsible for it.
This is a consideration for being debt free. If you die and don't owe a sole… there is much less for your heirs to deal with. Not to mention the inheritance would be much greater.
a few months before my 91 yr old dad passed away, while very sick, he demanded that he see me. when he came to my house he looked around and told me that i handled money very well and told me he was leaving me money to finish my house. i was in the middle of building a new home, without a mortgage. dad was very impressed.
after my daddy passed, he left me almost a million dollars, more than enough to finish my house.
i finished the home, bought another home at a beach (no mortgage), went to Paris and Italy and invested the rest, I live off the interest and will never work again.
As they say, fools and their money part soon. Had this friend who received a large inheritance. Spent the whole pile on fast cars, vacations and the remainder was consumed by fast friends!
Would love to hear your ideas on how you invested the money – stocks, bonds ?
I am gifted a home worth $$50,000 by my Dad.He has close $30,000 in unsecured debt and makes regular, timely monthly payments. He won’t consider bankruptcy or debt solution.What is the best way to handle this property so I can keep the home if something were to happen to my Father? Any ideas would be much appreciated– Thanks,Garland